Welcome to Latam Insights, a compendium of the most relevant crypto and economic development news from Latin America during the last week. In this issue, Bolivia mulls using the Chinese yuan in international trade settlements, inflation reaches 108.8% in Argentina, and Steve Hanke states he can eliminate Venezuela’s inflation in 30 days.
Bolivia Mulls Using Chinese Yuan in International Trade Settlements
The government of Bolivia has announced it is considering the usage of the Chinese yuan as a replacement for the US dollar for international trade settlements. The Bolivian President Luis Arce instructed the central bank to research if the recent advancement regarding the use of the Chinese currency in Brazil and Argentina could be also be applied in Bolivia’s case.
In a meeting with Bolivian journalists, Arce stated:
In the world, there are several countries that are going through illiquidity of dollars, to such an extent, what Argentina, Brazil, France, and the Arab countries are doing is no less. What are they doing? They decide not to trade in dollars.
Bolivia recently passed a law to sell half of its gold reserves for dollars to give a solution to its dollar liquidity issues.
Inflation Reaches 108.8% Year Over Year in Argentina
The National Statistics Institute of Argentina (INDEC) has delivered the price data corresponding to April, registering an inflation increase of 108.8% year over year. The inflation number jumped further higher than the 104.3% registered in March. Food and beverage items contributed the most to the rise in inflation numbers, with prices rising 10.1%.
The Argentine government explained that “the exchange rate unrest in the financial dollar markets, in the last part of the month, prompted preventive price increases in many products and services of our economy,” acknowledging that it would have to make bigger efforts to achieve better results in its fight against inflation.
Steve Hanke Believes He Can Eliminate Venezuela’s Inflation in 30 Days
Steve Hanke, professor of applied economics at Johns Hopkins University, stated that he could bring inflation down in Venezuela in 30 days. Hanke, who is currently an economic advisor to Roberto Henriquez, a presidential candidate for the upcoming elections, believes that the solution to Venezuelan inflation is the implementation of a currency-board system.
This currency board system would allow for the exchange of Venezuelan bolivares at a fixed rate against the US dollar. In an interview on a local radio station, Hanke stated:
Within 30 days the inflation in Venezuela would be completely eliminated: and the inflation rate would be very close to the inflation rates in the U.S.
Hanke has already directed programs of this kind in Estonia, Lithuania, Bulgary, and Bosnia and Herzegovina.
What do you think about the developments in Latin America this week? Tell us in the comment section below.